1. Consider the following transactions that take place in 2021. A rancher in Alberta takes $100 worth of inputs to produ

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1. Consider the following transactions that take place in 2021.
A rancher in Alberta takes $100 worth of inputs to produce animal
skin, which she sells to a tanner in Ontario for $700. The tanner
produces leather and sells it to a shoemaker in Portugal for $1200.
The shoemaker in Portugal produces shoes and sells it to a boutique
owner in British Columbia for $2000. The boutique owner in British
Columbia sells the shoes for $4000 to its customers.
a. What is the change in Canadian GDP as a result of these
transactions? For each transaction, explain why it is included or
excluded from Canadian GDP. (5 marks)
b. Show that the value-added approach and the expenditure
approach lead to the same GDP contribution. (5 marks)
c. Using this example, explain why GDP is also a measure of a
country’s income. (5 marks)